Instructor Manual for Mankiw's Principles of Economics, 10th Edition

Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718;
c c c c c c c


Chapter 1: Ten Principles of Economics c c c c c




Instructor Manual c


Mankiw,cPrinciplescofcEconomics,c10e,c9780357722718;cChapterc1:cTencPrinciplescofcEco
nomics
PreparedcbycDavidcR.cHakes,cUniversitycofcNortherncIowa


TABLE OF CONTENTSC C




PurposecandcPerspectivecofcthecChapter........................................................................................................ 2
ChaptercObjectives................................................................................................................................................. 2
CompletecListcofcChaptercActivitiescandcAssessments ............................................................................... 3
KeycTerms................................................................................................................................................................. 3
What'scNewcincThiscChapter ............................................................................................................................... 4
ChaptercOutline....................................................................................................................................................... 4
SolutionsctocTextcProblems................................................................................................................................. 9
QuestionscforcReview .......................................................................................................................................................... 9
ProblemscandcApplications............................................................................................................................................ 10
AdditionalcActivitiescandcAssignments .........................................................................................................13
AdditionalcResources..........................................................................................................................................14
CengagecVideocResources .............................................................................................................................................. 14




1

, Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718;
c c c c c c c


Chapter 1: Ten Principles of Economics
c c c c c




PURPOSE AND PERSPECTIVE OF THE CHAPTER
C C C C C




Chapterc1ciscthecfirstcchaptercincacthree-
chaptercsectioncthatcservescascthecintroductionctocthectext.cChapterc1cintroducesctencfundamentalcpri
nciplesconcwhichcthecstudycofceconomicsciscbased.cIncacbroadcsense,cthecrestcofcthectextciscancelaborat
ionconcthesectencprinciples.cChapterc2cwillcdevelopchowceconomistscapproachcproblemscwhilecChapt
erc3cwillcexplainchowcindividualscandccountriescgaincfromctrade.
ThecpurposecofcChapterc1cisctoclaycoutctenceconomiccprinciplescthatcwillcservecascbuildingcblockscforct
hecrestcofcthectext.cThectencprinciplesccancbecgroupedcintocthreeccategories:chowcpeoplecmakecdecisi
ons,chowcpeoplecinteract,candchowcthececonomycworkscascacwhole.cThroughoutcthectext,creferencesc
willcbecmadecrepeatedlyctocthesectencprinciples.

Keycpointscaddressedcincthiscchapter:

 Thecfundamentalclessonscaboutcindividualcdecisioncmakingcarecthatcpeoplecfacectrade-
offscamongcalternativecgoals,cthatctheccostcofcanycactionciscmeasuredcinctermscofcforgonecop
portunities,cthatcrationalcpeoplecmakecdecisionscbyccomparingcmarginalccostscandcmarginal
cbenefits,candcthatcpeoplecchangectheircbehaviorcincresponsectocthecincentivesctheycface.

 Thecfundamentalclessonscaboutceconomiccinteractionscamongcpeoplecarecthatctradecandci
nterdependenceccancbecmutuallycbeneficial,cthatcmarketscarecusuallycacgoodcwaycofccoord
inatingceconomiccactivity,candcthatcthecgovernmentccancpotentiallycimprovecmarketcoutco
mescbycremedyingcacmarketcfailurecorcbycpromotingcgreaterceconomiccequality.
 Thecfundamentalclessonscaboutcthececonomycascacwholecarecthatcproductivityciscthecultimatec
sourcecofcimprovingclivingcstandards,cthatcgrowthcincthecquantitycofcmoneyciscthecultimatecso
urcecofcinflation,candcthatcsocietycfacescacshort-runctrade-
offcbetweencinflationcandcunemployment.


CHAPTER OBJECTIVES
C




Thecfollowingcobjectivescarecaddressedcincthiscchapter:

 Explainchowcscarcitycinfluencescdecisions.

 Explainchowcindividualscevaluatecopportunityccostsctocmakecdecisions.

 Explainchowcmarginalcanalysiscinfluencescdecisioncmaking.

 Applycbasic,ceconomiccprinciplescofcindividualcdecisioncmakingcthatcdeterminechowcanc
economycgenerallycworks.

 Explainchowcthectermscofctradeccancleadctocgains.

 Givencacscenario,cidentifycthecdistributioncsystemcbeingcused.




2

, Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718;
c c c c c c c


Chapter 1: Ten Principles of Economics
c c c c c




COMPLETE LIST OF CHAPTER ACTIVITIES AND ASSESSMENTS
C C C C C C




Thecfollowingctablecorganizescactivitiescandcassessmentscsocthatcyouccancmakecdecisionscaboutcwhic
hccontentcyoucwouldclikectocemphasizecincyourcclass.cForcadditionalcguidance,creferctocthecTeachingc
OnlinecGuide.

Activity/Assessment Sourcec(i.e.,cPPTcslide,cWorkbo Duration
ok)
IcebreakercActivity PPTcSlidec2 5–10cmins.
ActivecLearningc1 PPTcSlidec14 5cmins.
ActivecLearningc2 PPTcSlidec17 5cmins.
ActivecLearningc3 PPTcSlidec28 20–25cmins.
Think-Pair-SharecActivity PPTcSlidec39 5–10cmins.
Self-Assessment PPTcSlidec40 5–10cmins.
Sectionc01-1cQuickQuiz MindTapceBook 5cmins.
Sectionc01-2cQuickQuiz MindTapceBook 5cmins.
Sectionc01-3cQuickQuiz MindTapceBook 5cmins.
ConceptClip:cEfficiency MindTapcLearncItcFolder 5cmins.
ConceptClip:cOpportunitycCost MindTapcLearncItcFolder 5cmins.
ConceptClip:cExternality MindTapcLearncItcFolder 5cmins.
Chapterc01cProblemsc&cApplications MindTapcStudycItcFolder 45–60cmins.
Chapterc01cA+cTestcPrep MindTapcStudycItcFolder N/A

Chapterc01cHomework MindTapcApplycItcFolder 30–45cmins.
Chapterc01cQuiz:cTencPrinciplescofcEcono MindTapcApplycItcFolder 20–30cmins.
mics


[returnctoctop]


KEY TERMSC




c BusinesscCycle:cfluctuationscinceconomiccactivity,csuchcascemploymentcandcproduction
Economics:cthecstudycofchowcsocietycmanagescitscscarcecresources
Efficiency:cthecpropertycofcsocietycgettingcthecmostcitccancfromcitscscarcecresources
Equality:cthecpropertycofcdistributingceconomiccprosperitycuniformlycamongcthecmemberscofcsociet
y

Externality:cthecuncompensatedcimpactcofconecperson’scactionsconcthecwell-beingcofcacbystander
Incentive:csomethingcthatcinducescacpersonctocact
Inflation:cancincreasecincthecoverallclevelcofcpricescincthececonomy
MarginalcChange:cancincrementalcadjustmentctocacplancofcaction




3

, Instructor Manual: Mankiw, Principles of Economics, 10e, 9780357722718;
c c c c c c c


Chapter 1: Ten Principles of Economics
c c c c c



MarketcEconomy:canceconomycthatcallocatescresourcescthroughcthecdecentralizedcdecisionscofcman
ycfirmscandchouseholdscasctheycinteractcincmarketscforcgoodscandcservices
MarketcFailure:cacsituationcincwhichcacmarketcleftconcitscowncdoescnotcallocatecresourcescefficiently
MarketcPower:cthecabilitycofcacsinglececonomiccactorc(orcsmallcgroupcofcactors)ctochavecacsubstantia
lcinfluenceconcmarketcprices
OpportunitycCost:cwhatevercmustcbecgivencupctocobtaincsomecitem
Productivity:cthecquantitycofcgoodscandcservicescproducedcfromceachcunitcofclabor
PropertycRights:cthecabilitycofcancindividualctocowncandcexerciseccontrolcovercscarcecresources
RationalcPeople:cpeoplecwhocsystematicallycandcpurposefullycdocthecbestctheyccanctocachievectheirc
objectives
Scarcity:ctheclimitedcnaturecofcsociety’scresources
[returnctoctop]


WHAT'S NEW IN THIS CHAPTER
C C C C




Thecfollowingcelementscarecimprovementscincthiscchaptercfromcthecpreviouscedition:

 AncexpandedcdiscussioncofcinflationcincthecUnitedcStatescfollowingctheccoronaviruscrecessionc
ofc2020.
[returnctoctop]




CHAPTER OUTLINE C




Thecfollowingcoutlinecorganizescactivitiesc(includingcanycexistingcdiscussioncquestionscincPowerPoi
ntscorcothercsupplements)candcassessmentscbycchapterc(andcthereforecbyctopic),csocthatcyouccancseec
howcallctheccontentcrelatesctocthectopicsccoveredcincthectext.
I. Introduction
A. Thecwordc“economy”ccomescfromcthecGreekcwordcoikonomoscmeaningc“onecwhoc
managescachousehold.”
1. InstructioncIdea:cBegincbycpointingcoutcthatceconomicsciscacsubjectcthatcst
udentscmustcconfrontcinctheircdailyclives.cPointcoutcthatctheycalreadycspendc
acgreatcdealcofctheirctimecthinkingcaboutceconomiccissues:cchangescincprices,
cbuyingcdecisions,cusecofctheirctime,cconcernscaboutcemployment,c etc.

B. Bothchouseholdscandceconomiescfacecmanycdecisionscaboutchowctocallocatec
resources.
C. Resourcescarecscarcecsoctheycmustcbecmanagedccarefully.




4